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A Need For Speed In Annuity Buying

PALM BEACH, Fla. - Advisors find themselves on the cusp of making strides in the retirement income illustration scenarios. But the annuity buying experience continues to lag the rest of the financial services industry.

That was the word from Kevin Kennedy, managing director and head of individual annuity for AXA Distributors in New York.

Kennedy moderated the session titled “Innovative Solutions to the Retirement Income Challenge” at the Insured Retirement Institute's annual conference at The Breakers. The session covered some of the technological disruption changing the face of the retirement income industry.

Advisors buy exchange traded funds (ETFs) in the blink of an eye.

Buying an annuity remains stuck in the last century.

The buying process around fee-based and commission-based annuities cries out for more speed and simplicity. This becomes more urgent as millions of baby boomers look to retirement income solutions to compensate for their gradually evaporating defined benefit plans.

“We need to make it simple and easy for products that people absolutely have to have,” Kennedy said.

To get a sense of just how fast some companies have signed, sealed and delivered insurance contracts, advisors should run their fingers along the cutting edges of insurance fintech, or financial technology.

Block Chain, Parametrics

Paris-based Axa earlier this month announced itself the first major insurer to use blockchain technology in promoting “fizzy,” a system designed to offer automatic compensation to policyholders with delayed flights.

Fizzy is an example of parametric insurance which uses parameters – flight data and statistics – to whip up an insurance contract that reimburses ticketholders in case of a delay.

Contracts are confirmed in seconds with immediate reimbursement for a flight that is more than two hours late.

Trov, an Australia-based company, offers property coverage to protect, say, an expensive watch or jewelry for 24 hours. Party-goers hitting the town at night don’t have to worry about losing an expensive item.

Insurance analysts call this on-demand or “smart insurance,” and that’s how some companies plan to sell to millennials hooked to mobile platforms.

It won’t be long before similar purchasing experiences find their way into the life and annuity sector.

“There are a lot of things going on across the globe that have not come to the U.S.,” Kennedy said.